IFU - The Investment Fund for Developing Countries

General Information

IFU, the Investment Fund for Developing Countries, is a financial institution established by the Danish Government in 1967 as a self-governing Fund. IFU can co-finance projects in developing countries with a per capita income below USD 6,138 (in 2012). 50% of IFU’s yearly investment must be made, however, in countries with a per capital income below USD 3.180.

IFU provides advisory services combined with investments in the form of share capital participation, loans and guarantees on commercial terms for investments in manufacturing or service companies.

IFU can normally co-finance up to 30% of the total project investment including working capital. For small projects the financing from IFU may go up to 50% of the total investment. The maximum amount invested in a single project is DKK 100m for IFU. It is a condition for IFU’s financial participation in a project that there is a private Danish co-investor. IFU normally has a seat in the board of directors in the project companies. IFU intends to withdraw from a project when it has become self-sustaining, typically 5-7 years after start-up. When IFU withdraws, the shares are normally offered to the other partners.

Through the partnership with IFU, companies also gain access to the Funds’ experience as global investors, their global network of advisers, and benefit from the respect that the Funds enjoy worldwide. IFU has unique knowledge when it comes to assessing and facilitating partner relations. Through the years the Funds have gained considerable insight and knowledge about the potential strengths and pitfalls of partnership. The Funds have six offices abroad and an extensive network of advisors in the countries where they work.

Instruments

Equity

The Fund may participate in the financing of projects with equity and quasi equity-instruments. IFU’s part of the equity capital shall always be smaller than that of the Danish partner.

Loans

IFU can offer loans denominated in convertible currencies, up to 5-7 years and with a grace period of 1-2 years. IFU can also offer loans with equity features or subordinated loans.

Guarantees

IFU can issue guarantees for loans to the projects offered by others, including local financial institutions.